The pound was sharply on the front foot on Thursday (1 September), hitting a four-week high against the euro after data released earlier in the day showed Britain's manufacturing sector overcome its post-Brexit worries.

By mid-afternoon sterling was up 0.93% against the common currency, exchanging hands at €1.1878 and was 0.81% higher against the dollar at $1.3245.

The gains came after the Markit's Purchasing Managers' Index (PMI) climbed from 48.3 in July, the lowest level in almost two years, to 53.3 in August, comfortably beating expectations for a 49 reading and reaching the highest level in 10 months.

"This [the data] will underscore hopes that July's post-referendum slump to a three-year low will be seen as a blip and that the Bank of England's actions last month were perhaps premature," said Chris Saint, senior analyst at Hargreaves Lansdown Currency Service. "If these were aimed at shoring up confidence they seem to have had the desired impact."

Joshua Mahony, market analyst at IG, added that the unexpected strength of the manufacturing sector has raised expectations of how Britain's gross domestic product will look in the third quarter.

"There is no doubt that UK exporters are enjoying this new found competitiveness amid a weaker pound and while questions remain, the UK is now starting to reap the benefits of June's referendum," he explained.